New rule would stop federal agencies from asking candidates about salary histories

In a new proposed rule, the Biden administration seeks to tackle the issue of pay inequality at the biggest employer in the country: the federal government. The proposal, introduced in May by the Office of Personnel Management, would ban federal agencies from considering the pay history of job candidates, which proponents argue would address pay gaps based on gender, race, and ethnicity while improving barriers to career advancement.

Making salary history, well, history. The rule’s repercussions could be large, and affect roughly 1.5 million of the federal government’s 2.2 million employees, according to Axios. Under the proposal, government agencies would be barred from asking about candidate salary history. According to the agency, such questions “may maintain or exacerbate pay inequity a job candidate experienced in their current or previous employment.”

Determining compensation based on salary history can perpetuate income inequality and discriminatory hiring practices, the agency wrote: “Nationally, women earn less than men, on average, and this pay gap varies by race and ethnicity.” Twenty-one states have banned questions pertaining to salary history, in addition to several city and local laws throughout the country, according to SHRM.

A 2020 study from Boston University researchers found that following the imposition of salary history bans in a dozen states, the pay of women and non-white employees increased by 6.2% and 5.9%, respectively, after they switched jobs.

Seeing a trend here? The OPM’s proposal comes as recent salary transparency laws in California and New York City have changed the hiring dynamic for scores of employers and millions of employees.

And in recent months, the Biden administration has made other moves intended to address issues related to pay and worker earning potential: In January, the FTC proposed a rule banning non-compete clauses in employee contracts. (The non-compete ban has faced opposition from SHRM and the US Chamber of Commerce, among others.) In February, the National Labor Relations Board banned non-disparagement clauses in severance agreements.

The OPM is requesting public comment on what data the federal government should consider related to salary history bans and employee turnover, research on the best ways to inform candidates about how organizations determine salaries, and various other criteria. The public comment phase ends June 12.—SB